ALU -5.92%: A weak session today for Altium despite upgrading their revenue guidance for FY22 with the stock down ~10% at the worst before recovering to close down a more modest 6%. The issue came around margins which has been a common theme for tech stocks this reporting period. 1H22 revenue came in at $102.2m inline with expectations while FY22 revenue guidance has been tightened to the top end of the prior range (now US$213-217m) suggesting the business has decent momentum. However, FY22 underlying EBITDA margin is expected to fall at the lower end of the unchanged 34-36% range due to costs associated with enterprise sales hiring. While this will likely result in slight earnings downgrades, given the context of the opportunity for ALU, we think the increased investment in additional headcount makes sense.
We remain bullish ALU despite today’s weakness
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